Turkey and the United States agreed on an outline for a multibillion dollar aid plan to cushion the economic shock if war breaks out with neighboring Iraq, Turkey's prime minister said Monday.
The package would be flexible and based on the length of any war and the amount of Turkey's losses, Prime Minister Abdullah Gul said.
"A method has been determined, a package if the subject of losses comes up," Gul said in televised remarks. "Is the loss going to be $1 billion, $50 billion, or $10 billion? We don't know."
A U.S. official said the aid package was designed to offset losses international investors say could range from $4 billion to $15 billion. The package of loans or grants would depend on whether Turkey cooperates in any war and if it adheres to an economic program with the International Monetary Fund, the official said on condition of anonymity.
Gul met Saturday with Secretary of State Colin Powell in Davos, Switzerland, where both were attending the World Economic Forum.
Turkish support is considered crucial to any conflict, and the United States has reportedly asked Turkey for permission to base 80,000 soldiers there. They would likely open a northern front against Iraq.
But Turkish officials have asked Washington to scale back its request. Opinion polls show that more than 80 percent of Turks oppose a war.
Turkey is suffering from its worst recession in decades and fears a war would devastate tourism, one of the country's biggest money makers.
Turkey's Deputy Prime Minister Ertugrul Yalcinbayir said Monday that Iraq had put up a "white flag" of surrender, but the United States was still looking for war.
"You'll declare war against an Iraq that that has surrendered and that has taken out its white flag," Yalcinbayir said. "Iraq right now is saying peace. Iraq is in a position that it has surrendered everything."
A Turkish newspaper, Milliyet, reported Sunday that the Turkish military had agreed to allow up to 20,000 U.S. troops to pass through the country into northern Iraq if there is war.
But the U.S. official said military talks were continuing between the countries.
The official said any aid package would have to be approved by Congress, which would be difficult if Turkey does not aid a war effort and if it does not adhere to IMF conditions.
Turkey is one of the IMF's biggest borrowers, with $31 billion in loans. A $1.6 billion loan has been on hold since October while the IMF waits for the government to enact reforms.
The government has called for relaxing some of the austerity measures in the plan to help the poor. The plan was designed to help Turkey out of a severe economic crisis which has left more than 2 million people unemployed.